Tinapa Business Resort: Another Success Story For Nigeriaís Financial System

By Kingsley Ighomwenghian Senior correspondent
28th March

On Monday, April 2, 2007, President Olusegun Obasanjo is billed to commission Calabar, Cross River State-based Tinapa Business Resort Limited, a project many say is another pointer to the enormous potential of the nationís money and capital market.

So far, the nationís banks and investment community have provided the bulk of the N50.32 billion so far invested in debt and equity since 2003 when the business and leisure resort was envisioned by Governor Donald Duke, who commissioned KPMG Professional Services for the initial studies.

Funding contribution for the project shows that 13 banks, using the Small and Medium Scale Enterprises Equity Investment Scheme (SMEEIS) window, invested a total of N4.6 billion out of the N5.3 billion approved by the Central Bank of Nigeria (CBN) when it added Tinapa to the list of projects banks are permitted to make equity investment under the scheme. The scheme, a collaborative effort between the CBN and the Bankersí Committee comprising chief executives of banks, discount houses and the Chartered Institute of Bankers of Nigeria (CIBN), among others, which was established in October 2001, required banks in the country to set aside 10 per cent of their profit before tax for equity investment in selected small and medium scale enterprises (SME). The reasoning then was that the SME sector, with such funds would grow thereby engendering industrialisation of the nation. Banks were also expected to hold no more than 40 per cent stake, have board seat that would ensure infusion of better management of the firms.

The Rivers State government followed with N1 billion equity stake and the Niger Delta Development Commission, N100 million. Private equity in the project also aggregated to N55 million, bringing cumulative equity stake to N5.75 billion.

The project, just like the banking sector consolidation exercise, which took place much later, between July 6, 2004 and December 31, 2005, also showed the ability of the Nigerian capital market to rally round a sellable idea. Promoters of Tinapa have been to the capital market to raise N20 billion from the bond market in two equal tranches. Union Bank of Nigeria supported the project with about N7.5 billion comprising N5.0 billion term-loan and N2.5 billion bridge finance. This brings the total debt component in the project to N27.5 billion, in addition to the N8.4 billion investment by Governor Donald Dukeís Cross River State Government.

According to Managing Director and Chief Executive Officer of Tinapa Business Resort, Mr. Sam Anani, the bond issues were possible because Obasanjoís support, which he expressed through "a sovereign guarantee that made it possible for Nigerian banks and other corporate investors to be able to put together this money. And that goes to show the seriousness with which the Federal Government and Mr. President, in particular have taken this project."

Another bank that showed confidence in the project at its inception was the United Bank for Africa Plc (specifically, Standard Trust Bank Plc, which in June 2005 merged with UBA under the consolidation programme of the apex bank, becoming the first of such). The bank gave N5 billion seed money, with which the major contractors- Julius Berger Nigeria Plc to mobilise to site.

Infrastructure

The lionís share of the amount invested in the project- about N46.02 billion has gone into putting the necessary infrastructure in place. The balance of N4.30 billion has been invested in a movie studio, expected to further boost the nationís burgeoning movie industry that makes the resort not just for business, but a leisure spot.

"Tinapa is established to create a world class entertainment resort, to enhance the quality of production, to bring Nigerians from number three in the world of entertainment, top number one. The vision is to create a commercial/leisure hub for the West and Central African hub. Cross River State is perhaps the most preferred tourism destination in the world.

"One of the visions behind Tinapa (also), is to grow and feed from the manufacturing sector, especially, within the Free Trade Zone in Calabar. There is no where else in the world where you have all the components that Tinapa has in one location," he said.

As A Private Sector Project

The less than 30 per cent investment by the host state government, according to Anani, is deliberate in the bid to ensure that the project is private-sector led thereby ensuring that Tinapa outlives successive governments. From the outset, the Duke-led administration has ensured that only one member of the board- the MD/CEO, who was then the state Finance Commissioner represents government on the board. Even then, Anani, a chartered accountant, was invited to government from the private sector. The board also has Mr. Kunle Hamilton, Managing Partner, KPMG (who has since resigned), Mr. Festus Odimegwu, who until recently was MD/CEO of Nigerian Breweries and Alhaji Ahmed Dasuki, among others.

In Tinapa, Anani stressed, "the government is investing in infrastructure- the roads, street lights and all other components of the structure. Those things are not making money. But Tinapa has signed a development agreement with government of over 40 years during which the government will be able to amortise its investment. We (Tinapa) will be paying government development levies annually so that it can recoup its investment in the structure in over 40 years. Because the government has put this investment upfront, it created the comfort in the private sector to now make its own investment. In the last 8 years, over US$3 billion has been invested in Cross River State from the private sector. That is creating jobs and opportunities for Cross Riverians."

On Listing On The NSE

Being an institution that will never let such an opportunity to boost its capitalisation and afford investors an opportunity to diversify their portfolio and reap bountiful harvest slip, the Nigerian Stock Exchange was another body that saw the potential of Tinapa. It was no surprise to many observers, when the promoters were quickly offered an opportunity to list the resort on the Exchange, without allowing it go through the rigorous listing requirements. "Our plan is to take Tinapa through an IPO and take it to the market early 2008. The justification is that we want Tinapa to trade for almost a year so that people can see revenue streams in order to make the IPO a massive success," according to Anani.

Listing Tinapa would expectedly offer the promoters an opportunity to raise fresh funds that would help reduce the debt considerable, thereby allowing more Nigerians to enter. The Initial Public Offering (IPO) of the companyís shares to the public would also ensure that the 13 banks divest their SMEEIS stake in a few years, after benefitting from the expected capital appreciation.
Benefits To Nigeria, CRSG

The MD/CEO believes that Tinapa is, perhaps, one of the major ways that the country would diversify its income base, growing significantly its income from the non-oil sector of the economy. The income from duties, he believes would be huge, once the product is dutiable and depending on the quantity involved.

"The truth is Tinapa will make more money for Nigeria as far as duties are concerned than what they are collecting at the ports of entry. Tinapa is targeted at West and Central African markets. People who come from outside Nigeria to buy things in Tinapa donít have to pay duties because they are taking the goods out of Nigeria. They will pay duties when they get to their own countries if the goods are dutiable. But Nigerians who go there to buy and who bring the goods into Nigeria at commercial quantity will pay the required duties. The rates will be embedded in the system we are putting in place. As you are paying for the goods, you are already paying the duties on the goods.

He explained further: "We have been able to get necessary approvals to the extent that if you buy goods in Tinapa for personal use, it is duty-free. Mr President has gracefully approved quantity of goods that can be classified as personal use. Similar goods that will arrive Kano or Lagos will be more expensive for Nigerians. So we believe that Nigerians will start driving and flying to Tinapa to buy products because all the products that you will find in Lagos, London, New York, among others, we are bringing into Tinapa."
Possibilities In Tinapa

Just like has been shown in Obajana Cement Company where 14 banks have opened branches within the sprawling estate in readiness for collection of sales proceeds and money transfers from the various suppliers and distributors alike, banks are expected to hoist their flags at Tinapa in readiness for business. This is expected to boost their deposit base.

According to a 2003 study for the Tinapa project, Nigerian businessmen and women that flock Dubai in the United Arab Emirates spend about $30 million (about N3.87 billion) on air fares alone. When the cost of goods purchased is added, the amount comes to about $1 billion (about N129 billion).

This, in the vaults of banks in Nigeria will help to ensure bigger earning capacity and profit, apart from encouraging cashless transactions through electronic purse.

For those afraid of headache from the Nigerian Customs, Anani said the resort is collaborating with the World Bank to ensure IT enabled customs protocols, thereby taking a lot of headache off the about three million visitors expected to bring in or take out goods.

Also, there is no fear of power outage as Tinapa is to be powered through an independent power plant constructed by CET, which will supply power to the occupiers of the various outlets for a fee.

Offering CRSí Tourism Potential Via Tinapa

Tinapa, according to its promoters, is a classic example of business tourism, with over 20 tourist attractions in the state alone, beginning with the Obudu Cattle Ranch, monoliths, caves and a rain forest, that is the largest in West Africa. Part of the governorís plan is to use tourism to create urban employment and open up markets for hotels within the resort are to become operational by June, as construction work is almost complete and the furniture and fixtures being expected very soon. Also, the cinema will be operational in June and the casino in August.

Other Efforts By Banks

The success of the nationís financial services sector will be better appreciated considering the fact that within the period when the Tinapa project was born and funded, about 14 banks successfully syndicated a loan of about N60 billion for the green field Obajana Cement Company promoted by the Dangote Group. The plant located in Kogi State was borne out of the frustration suffered by the group when, for 44 months, it was unable to take possession of Benue Cement Company after Dangote Industries Limited, a member of the group, acquired the Federal Governmentís 51 per cent equity stake. The plant began operation early this year, further boosting the nationís cement production capacity, in line with the governmentís desire to stop importation of the product from this year.

Another project that easily comes to mind, sign-posting the potential of the nationís banking sector in recent times, was last yearís syndication of about $205 million loan for the construction of a $428 million, 2.5 metric tones per annum cement plant at Mfamosing, near Calabar Cross River State. The plan for the project promoted by Flour Mils of Nigeria Plc was to develop United Cement Company of Nigeria Limited (UNICEM).

In all of these instances, however, the participating banks have always been some of the nationís strongest and best even before the consolidation period. Participating banks in the $205 million Project Finance Medium Term Facilities, which had Citigroup has mandated lead arranger, while Guaranty Trust Bank, Nigeria International Bank Limited (Citigroup) and Zenith Bank as lead arrangers. Other participants were Afribank Nigeria, First Bank of Nigeria, Diamond Bank, Ecobank Nigeria, IBTC Chartered Bank and Union Bank of Nigeria.

Conclusion

Beyond every other consideration, many believe that the Nigerian financial system is daily making giant strides, ever willing to provide capital for a project, provided they see huge potential in them. After all, many did not believe that the banking sector consolidation would record the kind of success it did initially, such that many of them within 24 months of their IPO have returned for fresh funds, because "bigger seems better" at a time like this. When would the next innovative product come to the market, whether for debt or equity? The nationís financial system beckons.

Beyond my usual praise for Donald, I tell you folks: Tinapa is only the beginning! There will be a domino effect on the state economy and with the completion of the monorail, a new airport, etc. Calabar might really become an African Dubai in its own right...

I hope to see more music festivals, sport events (other than the Mountain Race which is awsome), and above all agressive development of Calabar Marina for it to become a sort of "African Riviera" with an organic feel.

Beyond my usual praise for Donald, I tell you folks: Tinapa is only the beginning! There will be a domino effect on the state economy and with the completion of the monorail, a new airport, etc. Calabar might really become an African Dubai in its own right...

I hope to see more music festivals, sport events (other than the Mountain Race which is awsome), and above all agressive development of Calabar Marina for it to become a sort of "African Riviera" with an organic feel.

Zexyworm, but what gives you this optimism/security? Do you know more than we do? Nevertheless, it is so refreshing to read what you said!

THE commissioning today in Calabar, Cross River State of the multi-billion naira Tinapa Business Resort by President Olusegun Obasanjo will undoubtedly mark a watershed in the country's desire to become a prime tourism destination in the world.

Located on the Calabar River, and close to the Calabar Free Trade Zone (Calabar FTZ), Tinapa is the realization of Governor Donald Duke's dream of building the first integrated business and leisure resort in Nigeria.

On assumption of office in May 1999, the amiable young governor pledged to transform the state's economy with a view to creating jobs and enduring opportunities for all.

Following the pledge, the governor initiated the Tinapa project which skeptics then described as a white elephant project. But Duke stuck to his idea, insisting that the vision must succeed.

And that vision is to lay a catalytic role in establishing Calabar as a trade and distribution hub in West Africa while at the same time providing a unique tourism experience that will inform the growth and enhancement of the tourism sector in Calabar, Cross River State and Nigeria.

Through the unique vision, it was hoped that Calabar, with its enormous potential for tourism, will transform itself into a global trading hub reminiscent of leading international free zones such as Dubai and Hong Kong.

The passion with which the Cross River State government carried on with the project attracted the interest of the public sector as many blue chip companies threw their weight behind the project, making it arguably Nigeria's biggest public-private partnership projects ever.

The first phase being commissioned today covers 80,000 square metres, consisting of four wholesale emporiums, 100 retail outlets, a food court and car park for 3,000 cars and an 'entertainment strip' with a casino, restaurants, cinema, leisure facilities and a 'fisherman's village.

With the Free Trade Zone status which the resort would enjoy, importing wholesalers and retailers will not have to pay import taxes and duties. That means that importers at Tinapa will not have to wait for weeks for their goods to be cleared by custom officials. The total import time expected in the FTZ, according to its chief executive, Sam Amani, will be "only 24 hours from dockside to truck."

Federal government has never stopped commending the Tinapa initiative. In fact, President Obasanjo who will proudly commission the resort today, has at different times hailed the vision of Governor Duke in establishing the resort.

Not too long ago, however, Minister of Information and Communication, Mr. Frank Nweke (Jnr.) while touring the project site, described the resort as a significant socio-economic landmark under the current democratic dispensation.

Nweke said the project was well concerned in line with federal government's efforts to promote non-oil sectors of the economy as alternative sources of revenue generation, job creation and poverty alleviation.

The minister noted that the Nollywood studio at the resort would boost local movie industry just as the shopping convenience it provides would discourage frequent overseas travels by Nigerians who go abroad to shop.

It is expected that by the end of 2008, about 3 million visitors would have visited Tinapa, spending an average of N100,000, therefore, injecting about N300 billion into Cross River State.

With the commissioning of the resort today, there is no denying the fact that Governor Duke has delivered on his 1999 promise of transforming Cross River State's economy with a view to creating jobs and enduring opportunities for all.

The dream of creating Africaís most exciting leisure and business resort, so eloquently espoused by His Excellency, Governor Donald Duke in 1999, has become a reality.

In a glittering ceremony held at the Tinapa Business Resort, in front of a most distinguished audience, led by His Excellency, President Olusegun Obasanjo, 3 000 dignitaries, business leaders and other guests toured the vast and hugely impressive resort.

The major construction has been successfully completed on time and the tenants are frantically busy with the shop fitting process and the stocking of merchandise, in readiness for the flood of consumers and traders who are expected to visit Tinapa after Opening Day.

The Hotel and Casino operator, Southern Sun, the cinema operator, Nu Metro, and others are powering ahead to complete the leisure and entertainment components of Tinapa.

All-in-all, the activity is progressing full steam ahead and the VIP visitors who left the resort universally impressed can surely attest to the amazing diversity and quality which consumers will enjoy at Tinapa.

Governor Donald Dukeís Vision Realised.

In May 1999, Donald Duke, the newly elected Governor of Cross River State, made a commitment to transform the stateís economy, and to create job opportunities.

He decided he could best achieve this through the creation of a business-tourism resort in Calabarís existing tax free zone. This was the largest project of its kind in Nigeriaís history, requiring an enormous amount of expertise across many professional and technical fields. The project had the enthusiastic support of the Federal Government, led by His Excellency, President Olusegun Obasanjo.

Governor Duke specifically insisted that in every aspect of the project, local Nigerians would be employed and where required, skills would be transferred by the consultant or contractor. Tinapa would effectively help train the next generation, enabling many Cross Riverians to advance themselves in new careers and expand their potential to succeed.

The design for Tinapa is breathtaking and audacious in its scope, taking its inspiration from some of the finest designs in the world and represents a landmark in mixed-use architecture.

Tinapa is a potent, enduring symbol of Nigeriaís spirit and vision and an excellent example of the African Renaissance. Here, where untamed forests covered the landscape, there has emerged the greatest trading hub in West Africa.

Tinapa is a great project, It'll transform Cross River State. Create entertainment and leisure facilities, have an impact on poverty reduction, infratructure is being built, An IPP will be constructed to supply electricty for the whole state. So in Brief, Cross Riverians, other Nigerians and Tourists are going to have a great time for sure.

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TBITE stands for; ThrivingBetterIn Things Essential
In Architecture we find a way of celebrating Humanity and of raising ourselves above the concerns of the matter of fact - Jonathan Glancey

President Olusegun Obasanjo, on Monday, inaugurated the N50bn Tinapa Business Resort in Calabar, with a declaration that the Federal Government would build a new airport in the Cross River State capital to take care of the post-Tinapa inauguration challenges.

A section of the Tinapa Business Resort in Calabar, Cross River State. The project will be inaugurated today.

The ground-breaking ceremony for the new airport, according to Obasanjo, will take place before May 29, 2007 the terminal date of the current administration. He said the new airport project would be financed by the state and the Federal Government on a 50-50 basis.

The President, who inspected facilities at the resort, including the Nolly-wood Studio, expressed appreciation to the Cross River State Governor, Mr Donald Duke, for his vision and courage in initiating the project, saying Tinapa had brought back the lost glory of Calabar as Nigeria’s first capital city.

He also commended the various stakeholders, including the banks that contributed to the realisation of the Tinapa project.

He added, “My great delight is informed by the fact that we are today, celebrating the actualisation of the audacious vision painstakingly initiated, devotedly implemented and amicably passed by Duke and his team.

“We must applaud your government for successfully embarking upon and courageously executing this project, which is surely going to change the face of Cross River State forever.”

Just like the Managing Director of the United Bank for Africa, Mr Tony Elumelu, who charged Nigerians to have a dream that could work like that of Tinapa, Obasanjo said it was a thing of joy that the Tinapa dream did not die.

He noted that having inaugurated the resort, there was the need for all the stakeho-lders, including the Federal Government to keep it alive. He said with the birth of Tinapa, a new business vista had been opened for the nation and for African.

“Tinapa, no doubt, represents one giant step in the direction of unprecedented economic growth and regeneration for our continent,” he added.

He said the government had considered the need for a new airport as part of the steps to keep Tinapa alive.

According to him, the decision to embark on the construction on of an entirely new airport was taken because of experts’ advice that it would be cheaper to build a new airport instead of expanding the existing one to accommodate bigger airplanes.

Duke, in his address, thanked the President and the various banks for believing in the dream and supporting it to the point of inauguration.

He said he was excited that the President resolved to midwife the project and stood by him from the beginning, even when most people did not believe in the Tinapa dream.